Design Studio 1.4 hangs while adding a new datasource.

DS (Design Studio) 1.4 64-bit works fine on the BO server, but when I try to do the same thing from the local installation of the application, Design Studio hangs for a few minutes and give me following message:

"Failed to initialize Query Panel (see error logs for details)"

I am not sure from where to read the log, and what to do next.

Please note: I am using UNX that connects to a SQL Server. DS works fine on the BO server, but does not from my local machine. The issue arises when I try to add a Data Source.

Any ideas?